On Friday 29th May 2020, the Chancellor announced an extension to the Self-Employment Income Support Scheme (“SEISS”) and confirmed the next steps for the Coronavirus Job Retention Scheme (“CJRS”).
CJRS – Next steps
- Employers will be able to bring back furloughed employees part-time from 1 July 2020 – this flexibility is being introduced one month earlier than planned to help bring people back to work
- Employers will decide the hours and shift patterns their employees will work ad be responsible for paying their wages while in work
- A new taper under the CJRS has been announced requiring employers to contribute to furloughed salaries from August
- The CJRS remains unchanged for June and July
- From August 2020 the Government will pay 80% of wages up to a cap of £2,500 but employers will be required to pay Employers National Insurance Contributions (“ER NICs”) and employer pension contributions (representing 5% of gross employment costs the employer would have incurred had the employee not been furloughed on average)
- From September 2020 the Government will pay 70% of wages up to a cap of £2,187.50 and employers will pay ER NICs and employer pension contributions and 10% of wages to make up to 80% total up to a cap of £2,500 (representing 14% of gross employment costs on average)
- From October 2020 the Government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and employer pension contributions and 20% of wages to make up to 80% total up to a cap of £2,500 (representing 23% of gross employment costs on average)
- Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and the actual hours worked
- Around 40% of employers have not made a claim for ER NICs or employer pension contributions and so will not be affected by the changes from August 2020
- Employment allowance will cover smaller employer’s NICs bills
- Around 25% of CJRS monthly claims are below thresholds where ER NICs and automatic enrolment pension contributions are due and so no employer contribution from these businesses will be required during August 2020
- Claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees. The scheme will therefore close to new entrants on 30 June 2020, with 10 June 2020 being the last day that employers can place employees on furlough
- From 1 July 2020 employers will be able to agree any working arrangements with previously furloughed employees
- When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week for grants to be calculated accurately across working patterns
SEISS – extension
- SEISS will be extended and those eligible will be able to claim a second and final grant capped at £6,570
- Applications for the second grant will open in August
- Individuals will be able to claim a second taxable grant worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits and capped at the lower figure of £6,570
- Individuals can continue to apply for the first SEISS grant until 13 July 2020
- The eligibility criteria us the same for both grants – individuals will need to confirm that their business has been adversely affected by COVID-19
The announcements bring relief for many self-employed people as well as navigating a way forward for employers who placed employees on furlough, some of those having being furloughed over 10 weeks ago. Further clarification is required especially with how this will affect temporary workers who have been put on furlough leave by employers.
The impact for companies in the temporary labour market which only pay employees when they are working and so, the scenario where the employer is expected to pay some of the costs from August and a proportion of earnings from September is a significant one which will need to be discussed with clients higher in the supply chain who utilise the temporary labour.
Further guidance is expected to be published on 12 June 2020.
If you require any further advice or guidance about how to manage the furlough process or any other employment guidance, such as redundancy, please get in touch with one of our advisors on 0121 445 6178